NEW YORK: Oil prices surged more than 2pc on Thursday on a sharp decrease in US crude inventories and as hopes of progress in resolving the US-China trade feud boosted investor sentiment.
Global benchmark Brent crude gained $1.43, or 2.4pc, to $62.13 a barrel by 11:12 a.m. EDT (1512 GMT).
US West Texas Intermediate (WTI) crude added $1.18, or 2.1pc, to $57.44 a barrel.
US crude, along with gasoline and distillate inventories, fell last week. Crude stocks dropped 4.8 million barrels, which was more than the 2.5 million barrel draw analysts had expected, the Energy Information Administration said.
Net US crude imports, however, rose last week by 934,000 barrels per day.
“We ripped higher – it’s definitely a bullish report all around,” said Bob Yawger, director of energy futures at Mizuho in New York.
“A big import number would usually be bearish, but it didn’t seem to dent the bullish end to the equation.”
The volume of US crude oil in storage should decrease in coming weeks before reversing course with the end of peak driving season and the start of significant refinery maintenance work, said Andrew Lipow, president at Lipow Oil Associates in Houston.
Crude prices had gained more than 4pc on Wednesday as positive Chinese economic data sparked a wider market rally.
On Thursday, China said Beijing and Washington had agreed to hold high-level trade talks in early October.
“The upswing itself is likely to have sparked further follow-up buying,” said Eugen Weinberg of Commerzbank, who added the planned US-China trade talks were among factors boosting investor risk appetite.
The prolonged US-China trade dispute has been a dampener on oil prices but Brent is still up about 12pc this year, helped by production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia.
Nonetheless, both OPEC and Russia boosted production in August, according to a Reuters survey and Russian energy ministry figures, weighing on prices.
Also putting downward pressure on prices has been mounting evidence of slowing economic growth worldwide, which has prompted analysts to lower forecasts for oil demand growth.
BP Chief Financial Officer Brian Gilvary told Reuters on Wednesday that global oil demand was expected to grow by less than 1 million barrels per day in 2019, a slowdown from previous years.